"ETH Futures Premium Plunges: Time to Buy Bottom?"

Ethereum Futures Premium Hits 1+ Year Low — Time to Buy the ETH Bottom?

Ether (ETH) price experienced a 9.3% decline between March 26 and March 28, reaching the $1,860 level for the first time in two weeks. This correction resulted in over $114 million in liquidations of leveraged ETH futures, causing the premium relative to the regular spot market to plummet to its lowest level in over a year.

Some traders believe that the rock-bottom ETH futures premium serves as a bottom signal, but let's analyze the data further to determine if this perspective holds any weight.

ETH Whales are Cautious About Further Price Declines

To gauge the interest of whales in Ethereum, it is essential to observe how the market is pricing put (sell) options compared to call (buy) options. When a downtrend is anticipated, the 25% delta skew metric rises above 6%, indicating a higher demand for hedging strategies. Conversely, bullish periods usually push the skew below -6%.

Currently, with the ETH options' 25% delta skew standing at 7%, it suggests a lack of confidence among professional traders, increasing the likelihood of continued bearish momentum.

The Ethereum Network Faces Fierce Competition

Attempting to identify the motivations behind sellers' actions is challenging, especially when considering the expanding competition faced by Ethereum from blockchains such as BNB Chain and Solana, as well as networks tailored to specific challenges.

Success of certain decentralized applications (DApps) could also impact Ether, like Ethena, which is transitioning to its own layer-1 blockchain despite currently holding $5.3 billion in total value locked (TVL) and raising $100 million in December 2024 to support the shift.

It might be premature to assume that the ETH price will continue to decline, as a major protocol update is imminent. Investors should closely monitor the practical implications of Ethereum's Pectra upgrade, particularly concerning base layer fees and overall usability for the average user. Until then, the chances of ETH outperforming the broader altcoin market appear slim.

This article provides general information and should not be considered legal or investment advice. The views expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.